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This Rights Agreement(this Agreement) is dated as of September 27, 2010, and
is made between Cypress Bioscience, Inc., a Delaware corporation (the Company), and
American Stock Transfer & Trust Company, LLC, as rights agent (Rights Agent).

Recitals

The Board of Directors of the Company (the Board) has authorized and declared a dividend of
one preferred share purchase right (a Right) for each Common Share (as such term is hereinafter
defined) outstanding at the Close of Business (as such term is hereinafter defined) on October 8,
2010 (the Record Date), each Right representing the right to purchase one one-hundredth of a
Preferred Share (as such term is hereinafter defined), upon the terms and subject to the conditions
herein set forth, and has further authorized and directed the issuance of one Right with respect to
each Common Share that shall become outstanding between the Record Date and the earliest to occur
of the Distribution Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined); provided, however, that Rights may be issued with respect to Common Shares
that shall become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date and the Final Expiration Date in accordance with the provisions of Section 22
hereof.

Agreement

Accordingly, in consideration of the premises and the mutual agreements herein set forth, the
parties hereby agree as follows:

SECTION 1. Certain Definitions. For purposes of this Agreement, the following terms have
the meanings indicated:

(a) Agreement shall have the meaning set forth in the first paragraph hereof.

(b) Acquiring Person shall mean any Person who or that, together with all Affiliates and
Associates of such Person, without the prior written approval of the Board, shall be the Beneficial
Owner of 15% or more of the Common Shares then outstanding. Notwithstanding the foregoing, (A) the
term Acquiring Person shall not include (i) the Company, (ii) any Subsidiary (as such term is
hereinafter defined) of the Company, (iii) any employee benefit or compensation plan of the Company
or any Subsidiary of the Company, (iv) any entity holding Common Shares for or pursuant to the
terms of any such employee benefit or compensation plan of the Company or any Subsidiary of the
Company, or (v) Ramius V&O Acquisition LLC (the Purchaser) and its Affiliates and Associates if
the Purchaser shall have acquired in the tender offer commenced on September 15, 2010 for the
Company (the Ramius Offer) such number of Common Shares that represent, together with the Common
Shares owned by such Persons at the commencement of the Ramius Offer, 90% of the then-outstanding
Common Shares on a fully diluted basis at a price of not less than $4.25 per share and prior to
such acquisition shall have irrevocably committed to a merger of the Company as promptly as

1.

practicable in which merger all remaining Common Shares will be converted into the right to
receive the same consideration paid in the Ramius Offer, and (B) no Person shall become an
Acquiring Person (x) as the result of an acquisition of Common Shares by the Company that, by
reducing the number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 15% or more of the Common Shares then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of the Common Shares
then outstanding by reason of share purchases by the Company and shall, following written notice
from, or public disclosure by, the Company of such share purchases by the Company, become the
Beneficial Owner of any additional Common Shares without the prior written approval of the Board
(other than by means of a dividend made by the Company on the Common Shares outstanding or pursuant
to a split, subdivision or other reclassification of the Common Shares undertaken by the Company)
and shall then be the Beneficial Owner of more than 15% of the Common Shares then outstanding, then
such Person shall be deemed to be an Acquiring Person, (y) as the result of the acquisition of
Common Shares directly from the Company, provided, however, that if a Person shall become the
Beneficial Owner of 15% or more of the Common Shares then outstanding by reason of Common Share
acquisitions directly from the Company and shall, after that date, become the Beneficial Owner of
any additional Common Shares without the prior written approval of the Board (other than by means
of a dividend made by the Company on the Common Shares outstanding or pursuant to a split,
subdivision or other reclassification of the Common Shares undertaken by the Company) and shall
then beneficially own more than 15% of the Common Shares then outstanding, then such Person shall
be deemed to be an Acquiring Person or (z) if the Board determines in good faith that a Person
who would otherwise be an Acquiring Person, as defined pursuant to the foregoing provisions of
this Section 1(b), has become such inadvertently (including, without limitation, because (1) such
Person was unaware that it beneficially owned 15% or more of the Common Shares then outstanding or
(2) such Person was aware of the extent of its Beneficial Ownership of Common Shares but had no
actual knowledge of the consequences of such Beneficial Ownership under this Agreement) and had no
intention of obtaining, changing or influencing the control of the Company, and such Person
divests, as promptly as practicable (as determined in good faith by the Board), following receipt
of written notice from the Company of such event, of Beneficial Ownership of a sufficient number of
Common Shares so that such Person would no longer be an Acquiring Person, as defined pursuant to
the foregoing provisions of this Section 1(b), then such Person shall not be deemed to be an
Acquiring Person for any purposes of this Agreement; provided, however, that if such Person shall
again become the Beneficial Owner of 15% or more of the Common Shares then outstanding, such Person
shall be deemed an Acquiring Person, subject to the exceptions set forth in this Section 1(b).

(c) Affiliate and Associate shall have the respective meanings ascribed to such terms in
Rule 12b-2 under the Exchange Act as in effect on the date of this Agreement; provided, however,
that the limited partners of a limited partnership shall not be deemed to be Associates of such
limited partnership solely by virtue of their limited partnership interests.

(d) A Person shall be deemed the Beneficial Owner of, and shall be deemed to beneficially
own, and shall be deemed to have Beneficial Ownership of, any securities:

2.

(i) that such Person or any of such Persons Affiliates or Associates is deemed to
beneficially own within the meaning of Rule 13d-3 or Rule 13d-5 under the Exchange Act as in effect
on the date of this Agreement;

(ii) that such Person or any of such Persons Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding, whether or not in writing (other than agreements
between the Company and any corporate partner or collaborator pursuant to which the right to
purchase acquire securities is conditioned upon the achievement of research, development
pre-clinical or clinical, regulatory or commercialization milestones), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to
beneficially own, securities tendered pursuant to a tender or exchange offer made by or on behalf
of such Person or any of such Persons Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangement
or understanding, whether or not in writing; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, any security if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or consent given to
such Person in response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D or 13G under the Exchange Act (or any comparable or
successor report); or

(iii) that are beneficially owned, directly or indirectly, by any other Person (or an
Affiliate or Associate thereof) with which such Person (or any of such Persons Affiliates or
Associates) has (A) any agreement, arrangement or understanding, whether or not in writing (other
than agreements between the Company and any corporate partner or collaborator pursuant to which the
right to purchase acquire securities is conditioned upon the achievement of research, development
pre-clinical or clinical, regulatory or commercialization milestones), for the purpose of
acquiring, holding, voting (except to the extent contemplated by the proviso to Section 1(d)(ii)(B)
hereof) or disposing of any securities of the Company or (B) any agreement, arrangement, or
understanding, whether or not in writing, to cooperate in obtaining, changing or influencing the
control of the Company; provided, however, an agreement, arrangement or understanding for purposes
of this Section 1(d)(iii) shall not be deemed to include actions, including any agreement,
arrangement or understanding, or statements by any member of the Board acting in their capacity as
such, provided, further, however that this exception shall not apply to a particular Person or
Persons if and to the extent that such Person or Persons, after the date of this Agreement,
acquires Beneficial Ownership of more than an additional 5% of the then outstanding Common Shares
of the Company unless (A) the shares are acquired directly from the Company or as part of an
employee benefit or compensation plan of the Company or a subsidiary of the Company or (B) the
Person establishes to the satisfaction of the Board that it is acting on its own behalf and not in
concert with any other Person and will not, upon completion of any purchases, be the Beneficial
Owner of 15% or more of the outstanding Common Shares; provided, however, that for the avoidance of
doubt, nothing in Section 1(d)(iii)(B) is intended to apply to or prevent the solicitation of
revocable proxies or consents in connection a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations promulgated under the Exchange
Act.

3.

Notwithstanding the foregoing, (i) the phrase, then outstanding, when used with reference to
a Persons Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such securities not then
actually issued and outstanding that such Person would be deemed to beneficially own hereunder,
(ii) nothing contained in this Section 1(d) shall cause a Person ordinarily engaged in business as
an underwriter of securities to be deemed the Beneficial Owner of, or to beneficially own, or
to have Beneficial Ownership of, any securities acquired or to be acquired in either (A) a bona
fide underwritten public offering of securities pursuant to an underwriting agreement entered into
by the Company and such Person or (B) a bona fide offering of securities pursuant to Rule 144A
under the Securities Act pursuant to a purchase agreement entered into by the Company and such
Person and (iii) no director or officer of the Company shall be deemed to Beneficially Own
securities Beneficially Owned by any other director or officer of the Company solely as a result of
actions taken by such directors or officers in their capacities as directors, officers, agents, or
employees of the Company.

(e) Board shall have the meaning set forth in the Recitals hereof.

(f) Business Day shall mean any day other than a Saturday, a Sunday, or a day on which
banking institutions in the State of New York are authorized or obligated by law or executive order
to close.

(g) Close of Business on any given date shall mean 5:00 p.m., Eastern time, on such date;
provided, however, that if such date is not a Business Day it shall mean 5:00 p.m., Eastern time,
on the next succeeding Business Day.

(h) Common Shares shall mean the shares of common stock, par value $0.001 per share, of the
Company; provided, however, that, Common Shares, when used in this Agreement in connection with a
specific reference to any Person other than the Company, shall mean the shares of the class or
series of capital stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person, the Person or Persons that ultimately
control such first-mentioned Person.

(i) Company shall have the meaning set forth in the first paragraph hereof.

(j) current per share market price shall have the meaning set forth in Section 11(d) hereof,
except as otherwise set forth in this Agreement.

(k) Distribution Date shall have the meaning set forth in Section 3 hereof.

(o) Interested Stockholder shall mean any Acquiring Person or any Affiliate or Associate of
an Acquiring Person or any other Person in which any such Acquiring Person, Affiliate or Associate
has an interest, or any other Person acting directly or indirectly on behalf of or in concert with
any such Acquiring Person, Affiliate or Associate.

(q) Preferred Shares shall mean shares of Series A Junior Participating Preferred Stock, par
value $0.001 per share, of the Company having the designations and the powers, preferences and
rights, and the qualifications, limitations and restrictions set forth in the Companys Certificate
of Designation for such Preferred Stock.

(r) Principal Party shall have the meaning set forth in Section 13(b) hereof.

(s) Purchase Price shall have the meaning set forth in Section 7(b) hereof.

(t) Record Date shall have the meaning set forth in the Recitals hereof.

(u) Redemption Date shall have the meaning set forth in Section 7(a) hereof.

(v) Redemption Price shall have the meaning set forth in Section 23(b) hereof.

(w) Right shall have the meaning set forth in the Recitals hereof.

(x) Right Certificate shall have the meaning set forth in Section 3(a) hereof.

(y) Rights Agent shall have the meaning set forth in the first paragraph hereof.

(z) Securities Act shall mean the Securities Act of 1933, as in effect on the date in
question, unless otherwise specifically provided.

(aa) Shares Acquisition Date shall mean the first date of public announcement by the Company
or an Acquiring Person, prior to the earlier of the Redemption Date and the Final Expiration Date,
that an Acquiring Person has become such; provided, however, that, if such Person is determined not
to have become an Acquiring Person pursuant to clause (z) of Section 1(b)(B) hereof, then no Shares
Acquisition Date shall be deemed to have occurred.

(bb) Subsidiary of any Person shall mean any corporation or other entity of which a majority
of the voting power of the voting equity securities or equity interest is owned, directly or
indirectly, by such Person.

(cc) Summary of Rights shall have the meaning set forth in Section 3(b) hereof.

(dd) Trading Day shall have the meaning set forth in Section 11(d)(i).

5.

(ee) Transaction shall mean (i) any merger, consolidation or sale or transfer of assets or
earning power described in Section 13(a) hereof or (ii) any acquisition of Common Shares that would
result in a Person becoming an Acquiring Person or a Principal Party.

(ff) Transaction Person with respect to a Transaction shall mean (i) any Person who (x) is
or will become an Acquiring Person or a Principal Party if the Transaction were to be consummated
and (y) directly or indirectly proposed or nominated a director of the Company, which director is
in office at the time of consideration of the Transaction, or (ii) an Affiliate or Associate of
such a Person.

SECTION 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to
act as agent for the Company in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time appoint such co-rights
agents as it may deem necessary or desirable, upon written notice to the Rights Agent. The Rights
Agent shall have no duty to supervise, and in no event shall be liable for, the acts or omissions
of any such co-rights agent.

SECTION 3. Issue of Right Certificates.

(a) Until the earliest of the Close of Business on (i) the date 10 calendar days after the
Shares Acquisition Date, (ii) the tenth Business Day (or such later date as may be determined by
action of the Board prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement after the date hereof (determined in accordance with Rule 14d-2 under the Exchange
Act) by any Person of, or of the first public announcement after the date hereof of the intention
of any Person to commence, following the date of this Agreement, a tender or exchange offer (which
intention to commence remains in effect for five Business Days after such announcement), the
consummation of which would result in any Person becoming an Acquiring Person, and (iii) the date
on which the Ramius Offer is amended (or such later date as may be determined by the action of the
Board prior to such time as any Person becomes an Acquiring Person) to reduce the number of Common
Shares for which the Ramius Offer is being made, to amend or waive the condition that the number of
Common Shares that must be validly tendered and not withdrawn must be, together with the Common
Shares already owned by the Purchaser and its Affiliates, not less than 90% of the then outstanding
Common Shares on a fully diluted basis, to reduce the price offered to be paid in the Ramius Offer
or to make any other change in the Ramius Offer which, in the good faith determination of the Board
materially adversely affects the holders of Common Shares (including any such date that is after
the date of this Agreement and prior to the issuance of the Rights, the earliest of such dates
being herein referred to as the Distribution Date), (x) the Rights will be evidenced by the
certificates for Common Shares (which certificates shall also be deemed to be Right Certificates)
or, in the case of uncertificated shares, by the balances indicated in the book-entry account
system of the transfer agent for the Common Shares (together with a transaction advice with respect
to such shares), registered in the names of the holders thereof and not by separate Right
Certificates, and (y) the Rights (and the right to receive Right Certificates therefor) will be
transferable only in connection with the transfer of Common Shares. As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent will countersign, and
the Company will send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business

6.

on the Distribution Date, at the address of such holder shown on the records of the Company, a
Right Certificate, in substantially the form of Exhibit A hereto (a Right Certificate),
evidencing one Right for each Common Share so held, subject to the adjustment provisions of
Section 11. As of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

(b) On the Record Date, or as soon as practicable thereafter, the Company will send (directly
or through the Rights Agent or its transfer agent) a copy of a Summary of Rights to Purchase
Preferred Shares, in substantially the form of Exhibit B hereto (the Summary of Rights), by
first-class, postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the records of the Company.
With respect to certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates or book-entry accounts
(together with the transaction advice with respect to such shares) registered in the names of the
holders thereof. Until the Distribution Date (or the earlier of the Redemption Date and the Final
Expiration Date), the surrender for transfer of any Common Shares outstanding on the Record Date
shall also constitute the transfer of the Rights associated with the Common Shares.

(c) Certificates or transaction advices, as applicable, for Common Shares that become
outstanding after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them substantially the following legend:

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN CYPRESS BIOSCIENCE, INC. (THE
COMPANY) AND AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, AS RIGHTS AGENT (THE
RIGHTS AGENT), DATED AS OF SEPTEMBER 27, 2010, AS AMENDED FROM TIME TO TIME (THE
RIGHTS AGREEMENT), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE
AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL
BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS
CERTIFICATE. THE COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE
RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR
ADDRESSED TO THE SECRETARY OF THE COMPANY. AS DESCRIBED IN THE RIGHTS AGREEMENT,
RIGHTS ISSUED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE THEREOF (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN RELATED PERSONS,
WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER,
SHALL BECOME NULL AND VOID.

7.

With respect to the Common Shares, until the earliest of the Distribution Date, the Redemption
Date or the Final Expiration Date, the Rights associated with the Common Shares represented by such
certificates or held in such book-entry accounts shall be evidenced by such certificates or such
book-entry accounts (together with the transaction advice with respect to such shares) alone, and
the transfer of any Common Shares, whether by transfer of such certificate or such book-entry
shares, shall also constitute the transfer of the Rights associated with the Common Shares. In the
event that the Company purchases or acquires any Common Shares after the Record Date but prior to
the Distribution Date, any Rights associated with such Common Shares shall be deemed canceled and
retired so that the Company shall not be entitled to exercise any Rights associated with the Common
Shares that are no longer outstanding. Notwithstanding this Section 3(c), the omission of a legend
shall not affect the enforceability of any part of this Agreement or the rights of any holder of
the Rights.

(d) Notwithstanding anything to the contrary contained herein, Common Shares and Rights (and
any securities issuable on their exercise) may be issued and transferred by book-entry and not
represented by physical certificates. Where Common Shares and Rights (and any securities issuable
on their exercise) are held in uncertificated form, the Company and the Rights Agent shall
cooperate in all respects to give effect to the intent of the provisions contained herein.

SECTION 4. Form of Right Certificates.

(a) The Right Certificates (and the form of election to purchase Preferred Shares, the form of
assignment and the form of certification to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto and may have such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Company may deem appropriate and
as are not inconsistent with the provisions of this Agreement, or as may be required to comply with
any applicable law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or quotation system on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of Sections 7, 11 and 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase such number of one one-hundredths
of a Preferred Share as shall be set forth therein at the Purchase Price, but the number of one
one-hundredths of a Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.

(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22 hereof that represents
Rights that are null and void pursuant to the second paragraph of Section 11(a)(ii) hereof and any
Right Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this sentence shall contain
(to the extent feasible) substantially the following legend:

THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE ARE OR WERE BENEFICIALLY OWNED
BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY,
THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY ARE NULL AND VOID.

8.

The provisions of Section 11(a)(ii) hereof shall be operative whether or not the foregoing
legend is contained on any such Right Certificate.

SECTION 5. Countersignature and Registration. The Right Certificates shall be executed on
behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its
Vice Chairman of the Board, its Chief Financial Officer, or any of its Vice Presidents, either
manually or by facsimile signature, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right Certificates shall
be countersigned by the Rights Agent either manually or by facsimile signature and shall not be
valid for any purpose unless so countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such an officer before countersignature by
the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the Company with the same
force and effect as though the person who signed such Right Certificates had not ceased to be such
an officer; and any Right Certificate may be signed on behalf of the Company by any person who, at
the actual date of the execution of such Right Certificate, shall be a proper officer of the
Company to sign such Right Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.

Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its office
designated for such purpose, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right Certificates, the
certificate number of each Right Certificate and the date of each of the Right Certificates.

SECTION 6. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated,
Destroyed, Lost or Stolen Right Certificates. Subject to the provisions of
Sections 11(a)(ii), 14 and 24 hereof, at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the earlier of the Redemption Date or the Final
Expiration Date, any Right Certificate or Right Certificates may be transferred, split up, combined
or exchanged for another Right Certificate or Right Certificates, entitling the registered holder
to purchase a like number of one one-hundredths of a Preferred Share as the Right Certificate or
Right Certificates surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates
shall make such request in writing delivered to the Rights Agent, and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or exchanged at the office
of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Right Certificate and shall have provided
such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 11(a)(ii), 14 and 24 hereof, countersign and deliver to the person
entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested.
The Company may require

9.

payment of a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Right Certificates.

Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to them, and, at the Companys
request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will issue, execute and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.

(a) The registered holder of any Right Certificate may exercise the Rights evidenced thereby
(except as otherwise provided herein) in whole or in part at any time after the Distribution Date
upon surrender of the Right Certificate, with the form of election to purchase on the reverse side
thereof properly completed and duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with (if applicable) payment of the Purchase Price in cash,
or by certified check, cashiers check, bank draft or money order payable to the order of the
Company for each one one-hundredth of a Preferred Share (or such other number of shares or other
securities) as to which the Rights are exercised, prior to the earlier of (i) the Close of Business
on October 8, 2011 (the Final Expiration Date), or (ii) the time at which the Rights are redeemed
as provided in Section 23 hereof (the Redemption Date).

(b) The purchase price for each one one-hundredth of a Preferred Share pursuant to the
exercise of a Right shall initially be $15 (the Purchase Price) and shall be subject to
adjustment from time to time as provided in Section 11 and Section 13 hereof and shall be payable
in lawful money of the United States of America in accordance with Section 7(c) below. In the
event a holder of a Right shall elect to acquire one Common Share per Right under Section
11(a)(ii)(B), the Purchase Price shall be the surrender of one Right for each Common Share elected
to be acquired and there shall be no monetary amount due.

(c) Upon receipt of a Right Certificate representing exercisable Rights, with the form of
election to purchase properly completed and duly executed, accompanied by payment of the Purchase
Price for the shares to be purchased (if applicable) and an amount equal to any applicable tax or
charge required to be paid by the holder of such Right Certificate in accordance with Section 9
hereof by certified check, cashiers check, bank draft or money order payable to the order of the
Company, the Rights Agent shall thereupon promptly (i) (A) requisition from any transfer agent for
the Preferred Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B)
if the Company, in its sole discretion, shall have elected to deposit the Preferred Shares issuable
upon exercise of the Rights hereunder into a depository, requisition from the depositary agent
depositary receipts representing such number of one one-hundredths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent)

10.

and the Company hereby directs the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or
depositary receipts, cause the same to be delivered to or upon the order of the registered holder
of such Right Certificate, registered in such name or names as may be designated by such holder and
(iv) when appropriate, after receipt, deliver such cash to or upon the order of the registered
holder of such Right Certificate. In the event that the Company is obligated to issue securities
of the Company other than Preferred Shares (including Common Shares) of the Company pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that such other
securities are available for distribution by the Rights Agent, if and when appropriate.

In addition, in the case of an exercise of the Rights by a holder pursuant to
Section 11(a)(ii) hereof, the Rights Agent shall return such Right Certificate to the registered
holder thereof after imprinting, stamping or otherwise indicating thereon that the rights
represented by such Right Certificate no longer include the rights provided by Section 11(a)(ii)
hereof, and, if fewer than all the Rights represented by such Right Certificate were so exercised,
the Rights Agent shall indicate on the Right Certificate the number of Rights represented thereby
that continue to include the rights provided by Section 11(a)(ii) hereof.

(d) In case the registered holder of any Right Certificate shall exercise fewer than all the
Rights evidenced thereby (other than a partial exercise of rights pursuant to Section 11(a)(ii) as
described in Section 7(c) hereof), a new Right Certificate evidencing Rights equivalent to the
Rights remaining unexercised shall be issued by the Rights Agent to the registered holder of such
Right Certificate or to the duly authorized assigns of such holder, subject to the provisions of
Section 14 hereof.

(e) The Company covenants and agrees that it will cause to be reserved and kept available out
of its authorized and unissued Preferred Shares or any Preferred Shares held in its treasury, the
number of Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with this Section 7.

(f) Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor
the Company shall be obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in this Section 7 unless such registered holder
shall have (i) completed and signed the certification following the form of election to purchase
set forth on the reverse side of the Right Certificate surrendered for such exercise, (ii) tendered
the Purchase Price (and an amount equal to any applicable transfer tax required to be paid by the
holder of such Right Certificate in accordance with Section 9) to the Company in the manner set
forth in Section 7(c), and (iii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.

SECTION 8. Cancellation and Destruction of Right Certificates. All Right Certificates
surrendered for the purpose of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if delivered or surrendered to the Rights Agent, shall be
canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly

11.

permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other
Right Certificate purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all canceled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Company.

SECTION 9. Availability of Preferred Shares. The Company covenants and agrees that so
long as the Preferred Shares (and, after the time a person becomes an Acquiring Person, Common
Shares or any other securities) issuable upon the exercise of the Rights may be listed on any
national securities exchange or quotation system, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange or quotation system upon official notice of issuance upon such exercise.

The Company covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares (or Common Shares and other securities, as the case may be)
delivered upon exercise of Rights shall, at the time of delivery of the certificates for such
Preferred Shares (or Common Shares and other securities, as the case may be) (subject to payment of
the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable
shares or other securities.

The Company further covenants and agrees that it will pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares (or Common Shares and other
securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be
required to pay any transfer tax that may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of certificates or
depositary receipts for the Preferred Shares in a name other than that of, the registered holder of
the Right Certificate evidencing Rights surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares upon the exercise of any Rights until any
such tax shall have been paid (any such tax being payable by the holder of such Right Certificate
at the time of surrender) or until it has been established to the Companys reasonable satisfaction
that no such tax is due.

As soon as practicable after the Distribution Date, the Company shall use its best efforts to:

(i) prepare and file a registration statement under the Securities Act with respect to the
securities purchasable upon exercise of the Rights on an appropriate form, will use its best
efforts to cause such registration statement to become effective as soon as practicable after such
filing and will use its best efforts to cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until the earlier of the
Redemption Date and the Final Expiration Date; and

12.

(ii) use its best efforts to qualify or register the Rights and the securities purchasable
upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or
appropriate.

The Company may temporarily suspend, for a period of time not to exceed 120 days, the
exercisability of the Rights in order to prepare and file a registration statement under the
Securities Act and permit it to become effective. Upon any such suspension, the Company shall
issue a public announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be
exercisable in any jurisdiction unless the requisite qualification in such jurisdiction shall have
been obtained and unless a registration statement under the Securities Act (if required) covering
the issuance of securities upon exercise of the Rights is effective.

SECTION 10. Preferred Shares Record Date. Each Person in whose name any certificate for
Preferred Shares or other securities is issued upon the exercise of Rights shall for all purposes
be deemed to have become the holder of record of the Preferred Shares or other securities
represented thereby on, and such certificate shall be dated, the date upon which the Right
Certificate evidencing such Rights was duly surrendered with the forms of election and
certification duly executed and payment of the Purchase Price (and any applicable transfer taxes)
was made; provided, however, that if the date of such surrender and payment is a date upon which
the Preferred Shares or other securities transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred Shares or other securities transfer
books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the holder
of a Right Certificate, as such, shall not be entitled to any rights of a holder of Preferred
Shares for which the Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions, or to exercise any preemptive rights, and shall not be
entitled to receive any notice of any proceedings of the Company, except as provided herein.

SECTION 11. Adjustment of Purchase Price, Number of Shares or Number of Rights. The
Purchase Price, the number of Preferred Shares covered by each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided in this Section 11.

(a)

(i) In the event the Company shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide the outstanding
Preferred Shares, (C) combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving entity), except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and kind of shares of
capital stock issuable on such date, shall be

13.

proportionately adjusted so that the holder of any Right exercised after such time shall be
entitled to receive the aggregate number and kind of shares of capital stock that, if such Right
had been exercised immediately prior to such date and at a time when the Preferred Shares transfer
books of the Company were open, such holder would have owned upon such exercise and been entitled
to receive by virtue of such dividend, subdivision, combination or reclassification; provided,
however, that in no event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company issuable upon exercise
of one Right. If an event occurs that would require an adjustment under both Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition
to, and shall be made prior to any adjustment required pursuant to Section 11(a)(ii) hereof.

(ii) In the event any Person becomes an Acquiring Person, each holder of a Right shall
thereafter have a right to receive, upon exercise thereof either (A) at a price equal to the then
current Purchase Price multiplied by the number of one one-hundredths of a Preferred Share for
which a Right is then exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product by (y) 50% of the then
current per share market price of the Common Shares (determined pursuant to Section 11(d) hereof)
on the date such Person became an Acquiring Person or (B) upon the surrender of one Right, one
Common Share, appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof; provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the provisions of Section 13
hereof, then only the provisions of Section 13 hereof shall apply and no adjustment shall be made
pursuant to this Section 11(a)(ii).

Notwithstanding anything in this Agreement to the contrary, from and after the time any Person
becomes an Acquiring Person, any Rights beneficially owned by (i) such Acquiring Person or an
Associate or Affiliate of such Acquiring Person, (ii) a transferee of such Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee after the Acquiring Person became such,
or (iii) a transferee of such Acquiring Person (or of any such Associate or Affiliate) who becomes
a transferee prior to or concurrently with the Acquiring Persons becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding regarding the
transferred Rights or (B) a transfer that the Board has determined is part of a plan, arrangement
or understanding that has as a primary purpose or effect the avoidance of this Section 11(a)(ii),
shall become null and void without any further action and no holder of such Rights shall have any
rights whatsoever with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this
Section 11(a)(ii) and Section 4(b) hereof are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of the Companys failure to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder. No Right Certificate shall be issued at any time upon the transfer of any Rights to an
Acquiring Person whose Rights would be void pursuant to the first sentence of this paragraph or any
Associate or Affiliate thereof or to any nominee of

14.

such Acquiring Person, Associate or Affiliate; and any Right Certificate delivered to the
Rights Agent for transfer to any Person whose Rights would be void pursuant to the first sentence
of this paragraph shall be canceled.

(iii) In lieu of issuing Common Shares in accordance with Section 11(a)(ii) hereof, the
Company may, if the Board determines that such action is necessary or appropriate and not contrary
to the interests of holders of Rights, elect to take all such action as may be necessary to
authorize, issue or pay, upon the exercise of the Rights, cash (including by way of a reduction of
the Purchase Price), property, Common Shares, other securities or any combination thereof having an
aggregate value equal to the value of the Common Shares that otherwise would have been issuable
pursuant to Section 11(a)(ii) hereof, which aggregate value shall be determined by a nationally
recognized investment banking firm selected by the Board. For purposes of the preceding sentence,
the value of the Common Shares shall be determined pursuant to Section 11(d) hereof. Following the
Distribution Date, the Board may suspend the exercisability of the Rights for a period of up to 60
days following the Distribution Date to the extent that the Board has not determined whether to
exercise its right of election under this Section 11(a)(iii). In the event of any such suspension,
the Company shall issue a public announcement stating that the exercisability of the Rights has
been temporarily suspended.

(b) In case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them to subscribe for or purchase Preferred
Shares (or shares having the same designations and the powers, preferences and rights, and the
qualifications, limitations and restrictions as the Preferred Shares (Equivalent Preferred
Shares)) or securities convertible into Preferred Shares or Equivalent Preferred Shares at a price
per Preferred Share or Equivalent Preferred Share (or having a conversion price per share, if a
security convertible into Preferred Shares or Equivalent Preferred Shares) less than the then
current per share market price of the Preferred Shares on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of Preferred Shares that the
aggregate offering price of the total number of Preferred Shares and/or Equivalent Preferred Shares
so to be offered (and/or the aggregate initial conversion price of the convertible securities so to
be offered) would purchase at such current market price and the denominator of which shall be the
number of Preferred Shares outstanding on such record date plus the number of additional Preferred
Shares and/or Equivalent Preferred Shares to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible); provided, however, that in
no event shall the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon exercise of one
Right. In case such subscription price may be paid in a consideration part or all of which shall
be in a form other than cash, the value of such consideration shall be as determined in good faith
by the Board, whose determination shall be described in a statement filed with the Rights Agent.
Preferred Shares owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made successively whenever such
a record date is fixed; and in the event that such rights, options or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price that would then be in effect if such
record date had not been fixed.

15.

(c) In case the Company shall fix a record date for the making of a distribution to all
holders of the Preferred Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving entity) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), the Purchase Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the Board, whose
determination shall be described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such current per share
market price of the Preferred Shares; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value of the shares of
capital stock of the Company to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that such distribution is
not so made, the Purchase Price shall again be adjusted to be the Purchase Price that would then be
in effect if such record date had not been fixed.

(d)

(i) For the purpose of any computation hereunder, the current per share market price of any
security (a Security for the purpose of this Section 11(d)(i)) on any date shall be deemed to be
the average of the daily closing prices per share of such Security for the 30 consecutive Trading
Days immediately prior to such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the announcement by the
issuer of such Security of (A) a dividend or distribution on such Security payable in shares of
such Security or securities convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security or securities convertible into such shares and prior to the
expiration of 30 Trading Days after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to reflect the current market price
per share equivalent of such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to trading on the New
York Stock Exchange or The NASDAQ Stock Market or, if the Security is not listed or admitted to
trading on the New York Stock Exchange or The NASDAQ Stock Market, as reported in the principal
consolidated transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Security is listed or, if the Security is not listed or
admitted to trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter market, as
reported in the OTC Bulletin Board, the Pink OTC Markets, Inc. or such other system then in use,
or, if on any such date the Security is not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making a market in the
Security selected by the Board or, if on any such date no professional market maker is making a
market in the Security, the price as determined in good faith by the

16.

Board. The term Trading Day shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the transaction of
business or, if the Security is not listed or admitted to trading on any national securities
exchange, a Business Day.

(ii) For the purpose of any computation hereunder, the current per share market price of the
Preferred Shares shall be determined in accordance with the method set forth in Section 11(d)(i)
hereof. If the Preferred Shares are not publicly traded, the current per share market price of
the Preferred Shares shall be conclusively deemed to be the current per share market price of the
Common Shares as determined pursuant to Section 11(d)(i) hereof (appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date hereof) multiplied
by one hundred. If neither the Common Shares nor the Preferred Shares are publicly traded,
current per share market price shall mean the fair value per share as determined in good faith by
the Board, whose determination shall be set forth in a statement filed with the Rights Agent.

(e) No adjustment in the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Purchase Price; provided, however, that any
adjustments that by reason of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one one-millionth of a Preferred
Share or one one-thousandth of any other share or security as the case may be. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction that requires such
adjustment or (ii) the date of the expiration of the right to exercise any Rights.

(f) If as a result of an adjustment made pursuant to Section 11(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any shares of capital stock of the
Company other than Preferred Shares, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained
in Sections 11(a) through 11(c) hereof, inclusive, and the provisions of Sections 7, 9, 10, 13 and
14 hereof with respect to the Preferred Shares shall apply on like terms to any such other shares.

(g) All Rights originally issued by the Company subsequent to any adjustment made to the
Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one one-hundredths of a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.

(h) Unless the Company shall have exercised its election as provided in Section 11(i) hereof,
upon each adjustment of the Purchase Price as a result of the calculations made in Section 11(b)
and Section 11(c) hereof, each Right outstanding immediately prior to the making of such adjustment
shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one
one-hundredths of a Preferred Share (calculated to the nearest one one-millionth of a Preferred
Share) obtained by (i) multiplying (x) the number of one one-hundredths of a Preferred Share
covered by a Right immediately prior to this adjustment by (y) the Purchase

17.

Price in effect immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such adjustment of the
Purchase Price.

(i) The Company may elect on or after the date of any adjustment of the Purchase Price to
adjust the number of Rights, in substitution for any adjustment in the number of one one-hundredths
of a Preferred Share purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of Rights shall
become that number of Rights (calculated to the nearest one one-hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase
Price in effect immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the
Right Certificates have been issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall cause to be
distributed to such holders of record in substitution and replacement for the Right Certificates
held by such holders prior to the date of adjustment, and upon surrender thereof, if required by
the Company, new Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates to be so distributed shall be issued, executed
and countersigned in the manner provided for herein and shall be registered in the names of the
holders of record of Right Certificates on the record date specified in the public announcement.

(j) Irrespective of any adjustment or change in the Purchase Price or the number of one
one-hundredths of a Preferred Share issuable upon the exercise of the Rights, the Right
Certificates theretofore and thereafter issued may continue to express the Purchase Price and the
number of one one-hundredths of a Preferred Share that was expressed in the initial Right
Certificates issued hereunder.

(k) Before taking any action that would cause an adjustment reducing the Purchase Price below
one one-hundredth of the then par value, if any, of the Preferred Shares issuable upon exercise of
the Rights, the Company shall take any corporate action that may, in the opinion of its counsel, be
necessary to enable the Company to validly and legally issue fully paid and nonassessable Preferred
Shares at such adjusted Purchase Price.

(l) In any case in which this Section 11 shall require that an adjustment in the Purchase
Price be made effective as of a record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior to

18.

such adjustment; provided, however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holders right to receive such additional shares
upon the occurrence of the event requiring such adjustment.

(m) The Company covenants and agrees that, after the Distribution Date, it will not, except as
permitted by this Agreement, take (or permit any Subsidiary to take) any action the purpose of
which is to, or if at the time such action is taken it is reasonably foreseeable that the effect of
such action is to, materially diminish or eliminate the benefits intended to be afforded by the
Rights.

(n) Notwithstanding anything in this Section 11 to the contrary, the Company shall be entitled
to make such reductions in the Purchase Price, in addition to those adjustments expressly required
by this Section 11, as and to the extent that it in its sole discretion shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred Shares, (ii) issuance
wholly for cash of any Preferred Shares at less than the current market price, (iii) issuance
wholly for cash of Preferred Shares or securities that by their terms are convertible into or
exchangeable for Preferred Shares, (iv) dividends on Preferred Shares payable in Preferred Shares
or (v) issuance of rights, options or warrants referred to hereinabove in Section 11(b), hereafter
made by the Company to holders of its Preferred Shares shall not be taxable to such stockholders.

(o) In the event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare or pay any dividend on the Common Shares payable
in Common Shares or (ii) effect a subdivision, combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of dividends in Common Shares) into a greater or
lesser number of Common Shares, then in any such case (A) the number of one one-hundredths of a
Preferred Share purchasable after such event upon proper exercise of each Right shall be determined
by multiplying the number of one one-hundredths of a Preferred Share so purchasable immediately
prior to such event by a fraction, the numerator of which is the number of Common Shares
outstanding immediately before such event and the denominator of which is the number of Common
Shares outstanding immediately after such event, and (B) each Common Share outstanding immediately
after such event shall have issued with respect to it that number of Rights that each Common Share
outstanding immediately prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(o) shall be made successively whenever such a dividend is declared
or paid or such a subdivision, combination or consolidation is effected.

(p) The exercise of Rights under Section 11(a)(ii) hereof shall only result in the loss of
rights under Section 11(a)(ii) hereof to the extent so exercised and shall not otherwise affect the
rights represented by the Rights under this Agreement, including the rights represented by
Section 13 hereof.

SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an
adjustment is made as provided in Sections 11 and 13 hereof, the Company shall promptly (a) prepare
a certificate setting forth such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for the Common Shares or
the Preferred Shares a copy of such certificate and (c) mail a brief

19.

summary thereof to each holder of a Right Certificate in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of any adjustment unless and until it
shall have received such certificate.

SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.

(a) In the event that, following the Distribution Date, directly or indirectly (x) the Company
shall consolidate with, or merge with and into, any Interested Stockholder, or if in such merger or
consolidation all holders of Common Stock are not treated alike, any other Person, (y) any
Interested Stockholder, or if in such merger or consolidation all holders of Common Stock are not
treated alike, any other Person shall consolidate with the Company, or merge with and into the
Company, and the Company shall be the continuing or surviving entity of such merger (other than, in
the case of either transaction described in (x) or (y), a merger or consolidation that would result
in all of the voting power represented by the securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into
securities of the surviving entity) all of the voting power represented by the securities of the
Company or such surviving entity outstanding immediately after such merger or consolidation and the
holders of such securities not having changed as a result of such merger or consolidation), or (z)
the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its Subsidiaries (taken as a whole) to any
Interested Stockholder or Interested Stockholders, or if in such transaction all holders of Common
Stock are not treated alike, any other Person (other than the Company or any Subsidiary of the
Company in one or more transactions each of which individually and all of which collectively do not
violate Section 13(d) hereof) then, and in each such case, proper provision shall be made so that
(i) each holder of a Right, subject to Section 11(a)(ii) hereof, shall have the right to receive,
upon the exercise thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then exercisable in
accordance with the terms of this Agreement and in lieu of Preferred Shares, such number of freely
tradeable Common Shares of the Principal Party, free and clear of liens, rights of call or first
refusal, encumbrances or other adverse claims, as shall be equal to the result obtained by (A)
multiplying the then current Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable (without taking into account any adjustment previously
made pursuant to Section 11(a)(ii) hereof) and dividing that product by (B) 50% of the then current
per share market price of the Common Shares of such Principal Party (determined pursuant to
Section 11(d) hereof) on the date of consummation of such consolidation, merger, sale or transfer;
(ii) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the Company pursuant to
this Agreement; (iii) the term Company shall thereafter be deemed to refer to such Principal
Party, it being specifically intended that the provisions of Section 11 hereof shall apply to such
Principal Party; and (iv) such Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its Common Shares) in connection with such
consummation as may be necessary to assure that the provisions hereof shall thereafter be

20.

applicable, as nearly as reasonably may be, in relation to its Common Shares thereafter
deliverable upon the exercise of the Rights.

(b) Principal Party shall mean:

(i) in the case of any transaction described in clause (x) or (y) of Section 13(a) hereof, the
Person that is the issuer of any securities into which Common Shares are converted in such merger
or consolidation, and if no securities are so issued, the Person that is the other party to the
merger or consolidation (or, if applicable, the Company, if it is the surviving entity); and

(ii) in the case of any transaction described in clause (z) of Section 13(a) hereof, the
Person that is the party receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions;

provided, however, that in any case, (1) if the Common Shares of such Person are not at such time
and have not been continuously over the preceding 12-month period registered under Section 12 of
the Exchange Act, and such Person is a direct or indirect Subsidiary or Affiliate of another Person
the Common Shares of which are and have been so registered, Principal Party shall refer to such
other Person; (2) if such Person is a Subsidiary, directly or indirectly, or Affiliate of more than
one Person, the Common Shares of two or more of which are and have been so registered, Principal
Party shall refer to whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value; and (3) if such Person is owned, directly or indirectly, by a
joint venture formed by two or more Persons that are not owned, directly or indirectly, by the same
Person, the rules set forth in (1) and (2) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such party were a Subsidiary of both or all of
such joint ventures and the Principal Parties in each such chain shall bear the obligations set
forth in this Section 13 in the same ratio as their direct or indirect interests in such Person
bear to the total of such interests.

(c) The Company shall not consummate any such consolidation, merger, sale or transfer unless
the Principal Party shall have a sufficient number of authorized Common Shares that have not been
issued or reserved for issuance to permit the exercise in full of the Rights in accordance with
this Section 13 and unless prior thereto the Company and each Principal Party and each other Person
who may become a Principal Party as a result of such consolidation, merger, sale or transfer shall
have (i) executed and delivered to the Rights Agent a supplemental agreement providing for the
terms set forth in Sections 13(a) and 13(b) hereof, and (ii) prepared, filed and had declared and
remain effective a registration statement under the Securities Act on the appropriate form with
respect to the Rights and the securities exercisable upon exercise of the Rights and further
providing that, as soon as practicable after the date of any consolidation, merger, sale or
transfer mentioned in Section 13(a) hereof, the Principal Party at its own expense will:

(i) cause the registration statement under the Securities Act on an appropriate form with
respect to the Rights and the securities purchasable upon exercise of the Rights to remain
effective (with a prospectus at all times meeting the requirements of the Securities Act) until the
earlier of the Redemption Date and the Final Expiration Date;

21.

(ii) use its best efforts to qualify or register the Rights and the securities purchasable
upon exercise of the Rights under the blue sky laws of such jurisdictions as may be necessary or
appropriate;

(iii) list the Rights and the securities purchasable upon exercise of the Rights on each
national securities exchange on which the Common Shares were listed prior to the consummation of
such consolidation, merger, sale or transfer or, if the Common Shares were not listed on a national
securities exchange prior to the consummation of such consolidation, merger, sale or transfer, on a
national securities exchange; and

(iv) deliver to holders of the Rights historical financial statements for the Principal Party
and each of its Affiliates that comply in all material respects with the requirements for
registration on Form 10 under the Exchange Act.

The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.

(d) After the Distribution Date and until the earlier of the Redemption Date and the Final
Expiration Date, the Company covenants and agrees that it shall not (i) consolidate with, (ii)
merge with or into, or (iii) sell or transfer to, in one or more transactions, assets or earning
power aggregating more than 50% of the assets or earning power of the Company and its Subsidiaries
taken as a whole, any other Person (other than a Subsidiary of the Company in a transaction that
does not violate Section 11(m) hereof), if (x) at the time of or after such consolidation, merger,
sale or transfer there are any charter or bylaw provisions or any rights, warrants or other
instruments or securities outstanding, agreements in effect or any other action taken that would
diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger, sale or transfer, the
stockholders of the Person who constitutes, or would constitute, the Principal Party for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates. The Company shall not consummate any such
consolidation, merger, sale or transfer unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a supplemental agreement evidencing
compliance with this Section 13(d).

SECTION 14. Fractional Rights and Fractional Shares.

(a) The Company shall not be required to issue fractions of Rights or to distribute Right
Certificates that evidence fractional Rights. In lieu of such fractional Rights, there shall be
paid to the registered holders of the Right Certificates with regard to which such fractional
Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current
market value of a whole Right. For the purposes of this Section 14(a), the current market value of
a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities listed or admitted
to trading on the New York Stock Exchange or The NASDAQ Stock Market, if the Rights are not

22.

listed or admitted to trading on the New York Stock Exchange of The NASDAQ Stock Market, as
reported in the principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported in the OTC Bulletin Board, the Pink OTC Markets,
Inc. or such other system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a professional market
maker making a market in the Rights selected by the Board. If on any such date no such market
maker is making a market in the Rights, the fair value of the Rights on such date as determined in
good faith by the Board shall be used.

(b) The Company shall not be required to issue fractions of Preferred Shares (other than
fractions that are integral multiples of one one-hundredth of a Preferred Share) upon exercise of
the Rights or to distribute certificates that evidence fractional Preferred Shares (other than
fractions that are integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred Share may, at the
election of the Company, be evidenced by depositary receipts; provided, however, that holders of
such depositary receipts shall have all of the designations and the powers, preferences and rights,
and the qualifications, limitations and restrictions to which they are entitled as beneficial
owners of the Preferred Shares represented by such depositary receipts. In lieu of fractional
Preferred Shares that are not integral multiples of one one-hundredth of a Preferred Share, the
Company shall pay to the registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the current market
value of one Preferred Share. For the purposes of this Section 14(b), the current market value of
a Preferred Share shall be the closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
such exercise; provided, however, that if the Preferred Shares are not publicly traded at the time
of such exercise, the current market value of a Preferred Share shall be determined in accordance
with Section 11(d)(ii) hereof for the Trading Day immediately prior to the date of such exercise.

(c) Following the occurrence of one of the transactions or events specified in Section 11
hereof giving rise to the right to receive Common Shares or other securities (other than Preferred
Shares) upon the exercise of a Right, the Company shall not be required to issue fractions of
Common Shares or other securities upon exercise of the Rights or to distribute certificates that
evidence fractional Common Shares or other securities. In lieu of fractional Common Shares or
other securities, the Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same fraction of the
current market value of one Common Share or one such other security. For purposes of this
Section 14(c), the current market value shall be the closing price for one Common Share or such
other security, as applicable (as determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise; provided, however, that
if such other security is not publicly traded at the time of such exercise, such security shall
have the value of one one-hundredth of a Preferred Share as determined pursuant to Section 14(b)
hereof.

23.

(d) The holder of a Right by the acceptance of the Right expressly waives any right such
holder may have to receive any fractional Rights or any fractional shares upon exercise of a Right
(except as provided above).

SECTION 15. Rights of Action. All rights of action in respect of this Agreement,
excepting the rights of action given to the Rights Agent under Sections 18 and 20 hereof, are
vested in the respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares) and any registered holder of any
Right Certificate (or, prior to the Distribution Date, of the Common Shares), without the consent
of the Rights Agent or of the holder of any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in such holders own behalf and for such holders own benefit,
enforce, and may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holders right to exercise the Rights evidenced by
such Right Certificate in the manner provided in such Right Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate remedy at law for
any breach of this Agreement and will be entitled to specific performance of the obligations under,
and injunctive relief against actual or threatened violations of the obligations of any Person
subject to, this Agreement. Holders of Rights shall be entitled to recover the reasonable costs
and expenses, including attorneys fees, incurred by them in any action to enforce the provisions of
this Agreement.

Notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a result of the
inability of the Company or the Rights Agent to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, judgment, decree or ruling
(whether interlocutory or final) issued by a court or by a governmental, regulatory,
self-regulatory or administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, that the Company shall use all
reasonable efforts to have any such injunction, order, judgment, decree or ruling lifted or
otherwise overturned as soon as possible.

SECTION 16. Agreement of Right Holders. Every holder of a Right, by accepting the same,
consents and agrees with the Company and the Rights Agent and with every other holder of a Right
that:

(a) prior to the Distribution Date, the Rights will be transferable only in connection with
the transfer of the Common Shares;

(b) after the Distribution Date, the Right Certificates are transferable (subject to the
provisions of this Agreement) only on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of
transfer; and

(c) the Company and the Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Shares

24.

certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificates or the associated
Common Shares certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice
to the contrary.

SECTION 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Right Certificate shall be entitled to vote, receive dividends or be deemed for any purpose the
holder of the Preferred Shares or any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything contained herein or
in any Right Certificate be construed to confer upon the holder of any Right Certificate, as such,
any of the rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such Right Certificate
shall have been exercised in accordance with the provisions hereof.

SECTION 18. Concerning the Rights Agent. The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it hereunder and, from time to time, on demand
of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in
the administration and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any loss, liability, or expense, incurred without gross negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises. The indemnity provided
herein shall survive the expiration of the Rights and the termination of this Agreement.

The Rights Agent shall be protected and shall incur no liability for, or in respect of any
action taken, suffered or omitted by it in connection with, its administration of this Agreement in
reliance upon any Right Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper
or document believed by it to be genuine and to be signed, executed and, where necessary, verified
or acknowledged, by the proper person or persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof. In no case will the Rights Agent be liable for special, indirect,
incidental or consequential loss or damage of any kind whatsoever (including but not limited to
lost profits), even if the Rights Agent has been advised of such loss or damage.

SECTION 19. Merger or Consolidation or Change of Name of Rights Agent. Any Person into
which the Rights Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or
any successor Rights Agent shall be a party, or any Person succeeding to the shareholder services
or corporate trust business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or

25.

filing of any paper or document or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement any of the Right Certificates shall have been countersigned
but not delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, any successor Rights Agent
may countersign such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement.

In case at any time the name of the Rights Agent shall be changed and at such time any of the
Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver Right Certificates so countersigned; and in case
at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed name; and in all
such cases such Right Certificates shall have the full force provided in the Right Certificates and
in this Agreement.

SECTION 20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance thereof, shall be bound:

(a) The Rights Agent may consult with legal counsel of its choice (who may be legal counsel
for the Company), and the opinion of such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.

(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem
it necessary or desirable that any fact or matter be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary of the
Company and delivered to the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

(c) The Rights Agent shall be liable hereunder to the Company and any other Person only for
its own gross negligence, bad faith or willful misconduct.

(d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or
recitals contained in this Agreement or in the Right Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.

26.

(e) The Rights Agent shall not be under any responsibility in respect of the validity of this
Agreement or the execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate; nor shall it be
responsible for any change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Sections 3, 11, 13, 23 or 24 hereof, or the
ascertaining of the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Right Certificates after receipt of a
certificate pursuant to Section 12 hereof describing such change or adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.

(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.

(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to
the performance of its duties hereunder from any one of the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Financial Officer, any Vice President, the Secretary or
the Treasurer of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such officer or for any delay in acting while
waiting for those instructions. Any application by the Rights Agent for written instructions from
the Company may, at the option of the Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent with respect to its duties or obligations under this Agreement
and the date on and/or after which such action shall be taken or omitted and the Rights Agent shall
not be liable for any action taken or omitted in accordance with a proposal included in any such
application on or after the date specified therein (which date shall not be less than three
Business Days after the date indicated in such application unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking or omitting any such action, the
Rights Agent has received written instructions in response to such application specifying the
action to be taken or omitted.

(h) The Rights Agent and any stockholder, director, officer or employee of the Rights Agent
may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity
for the Company or for any other legal entity.

(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it
or perform any duty hereunder either itself or by or through its attorneys or agents,

27.

and the Rights Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company resulting from any such
act, default, neglect or misconduct, provided reasonable care was exercised in the selection and
continued employment thereof.

(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds for believing that repayment
of such funds or adequate indemnification against such risk or liability is not reasonably assured
to it.

(k) If, with respect to any Right Certificate surrendered to the Rights Agent for exercise or
transfer, the certificate attached to the form of assignment or form of election to purchase, as
the case may be, has not been executed, the Rights Agent shall not take any further action with
respect to such requested exercise of transfer without first consulting with the Company.

SECTION 21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon 30 days notice in writing
mailed to the Company and, in the event the Rights Agent or one of its Affiliates is not also the
transfer agent for the Companys securities, to each transfer agent for the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30
days notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be,
and to each transfer agent for the Common Shares or Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such appointment within a period
of 30 days after giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (which holder shall, with such notice, submit such holders Right Certificate for
inspection by the Company), then the registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be either (a) a Person organized
and doing business under the laws of the United States or of any state of the United States that is
authorized under such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50 million or (b) a direct
or indirect wholly owned Subsidiary of such Person or its wholly-owning parent. After appointment,
the successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any
property at the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective date of any such
appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and
each transfer agent for the Common Shares or Preferred Shares, and mail a notice thereof in writing
to the registered holders of the Right Certificates. Failure to

28.

give any notice provided for in this Section 21, however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

SECTION 22. Issuance of New Right Certificates. Notwithstanding any of the provisions of
this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earlier of the Redemption Date and the
Final Expiration Date, the Company (a) shall with respect to Common Shares so issued or sold
pursuant to the exercise of stock options or under any employee plan or arrangement in existence
prior to the Distribution Date, or upon the exercise, conversion or exchange of securities, notes
or debentures issued by the Company and in existence prior to the Distribution Date, and (b) may,
in any other case, if deemed necessary or appropriate by the Board, issue Right Certificates
representing the appropriate number of Rights in connection with such issuance or sale; provided,
however, that (i) the Company shall not be obligated to issue any such Right Certificates if, and
to the extent that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the Person to whom such
Right Certificate would be issued, and (ii) no Right Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.

SECTION 23. Redemption.

(a) The Rights may be redeemed by action of the Board pursuant to Section 23(b) hereof and
shall not be redeemed in any other manner.

(b)

(i) The Board may, at its option, at any time prior to the earlier of (A) such time as any
Person becomes an Acquiring Person, or (B) the Final Expiration Date, redeem all but not less than
all of the then outstanding Rights at a redemption price of $0.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the Redemption Price), and the
Company may, at its option, pay the Redemption Price in Common Shares (based on the current
per-share market price, as such term is defined in Section 11(d) hereof, of the Common Shares at
the time of redemption), cash or any other form of consideration deemed appropriate by the Board.
The redemption of the Rights by the Board may be made effective at such time, on such basis and
subject to such conditions as the Board in its sole discretion may establish.

(ii) In addition, the Board may, at its option, at any time after the time a Person becomes an
Acquiring Person but prior to any event described in clause (x), (y) or (z) of the first sentence
of Section 13 hereof, redeem all but not less than all of the then outstanding Rights at the
Redemption Price (x) in connection with any merger, consolidation or sale or other

29.

transfer (in one transaction or in a series of related transactions) of assets or earning
power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) in which all holders of Common Shares are treated alike and not involving (other
than as a holder of Common Shares being treated like all other such holders) an Interested
Stockholder or a Transaction Person or (y)(A) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of 15% or more of the then outstanding Common Shares, and (B) at
the time of redemption no other Persons are Acquiring Persons.

(c) Immediately upon the action of the Board ordering the redemption of the Rights pursuant to
Section 23(b) hereof, and without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or any defect in, any such notice shall
not affect the validity of such redemption. Within 10 days after such action of the Board ordering
the redemption of the Rights pursuant to Section 23(b) hereof, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares, provided, however, that failure to give, or any
defect in, any such notice shall not affect the validity of such redemption. Any notice that is
mailed in the manner herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner (i) other than that
specifically set forth in this Section 23 hereof, or (ii) other than in connection with the
purchase of Common Shares prior to the Distribution Date.

(d) Notwithstanding Section 23(c) hereof, the Company may, at its option, discharge all of its
obligations with respect to any redemption of the Rights by (i) issuing a press release announcing
the manner of redemption of the Rights and (ii) mailing payment of the Redemption Price to the
registered holders of the Rights at their last addresses as they appear on the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares, and upon such action, all outstanding Right Certificates shall be null and
void without any further action by the Company. In the event the Company elects to discharge all
of its obligations with respect to any redemption of Rights by mailing payment of the Redemption
Price to the registered holders of the Rights as set forth in the preceding sentence, the dollar
amount sent to each such registered holder representing the full Redemption Price to which such
registered holder is entitled shall be rounded up to the nearest whole cent.

SECTION 24. Notice of Certain Events. In case the Company shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular quarterly cash dividend),
(ii) to offer to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred Shares), (iv) to effect
any consolidation or merger into or with, or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or more transactions, of
50%

30.

or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole), to
any other Person, (v) to effect the liquidation, dissolution or winding up of the Company, or (vi)
to declare or pay any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by reclassification or otherwise
than by payment of dividends in Common Shares), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purpose of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date of participation
therein by the holders of the Common Shares and/or the Preferred Shares, if any such date is to be
fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 10 days prior to the
date of the taking of such proposed action or the date of participation therein by the holders of
the Common Shares and/or the Preferred Shares, whichever shall be the earlier.

SECTION 25. Notices. Notices or demands authorized by this Agreement to be given or made
by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by overnight delivery service or first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:

Subject to the provisions of Section 21 hereof, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the
Rights Agent shall be sufficiently given or made if sent by overnight delivery service or
first-class mail, postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:

Notices or demands authorized by this Agreement to be given or made by the Company or the
Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Company.

SECTION 26. Supplements and Amendments. Prior to the Distribution Date, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of the Rights. From and after the Distribution Date,
the Company and the Rights Agent shall, if the Company so directs, from time to time

31.

supplement or amend any provision of this Agreement without the approval of any holders of Right
Certificates in order to (i) cure any ambiguity, (ii) correct or supplement any provision contained
herein that may be defective or inconsistent with any other provisions herein, or (iii) change any
other provisions with respect to the Rights that the Company may deem necessary or desirable;
provided, however, that no such supplement or amendment shall be made that would adversely affect
the interests of the holders of Rights (other than the interests of an Acquiring Person or its
Affiliates or Associates). Any such supplement or amendment shall be evidenced by a writing signed
by the Company and the Rights Agent. Upon delivery of a certificate from an appropriate officer of
the Company that states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, the Rights Agent shall execute such supplement or amendment unless the Rights
Agent shall have reasonably determined that such supplement or amendment would adversely affect its
interest under this Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common Shares.

SECTION 27. Determination and Actions by the Board of Directors, Etc. For all purposes of
this Agreement, any calculation of the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of such outstanding Common Shares
or any other securities of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) under the Exchange Act as in effect on the date of
this Agreement. The Board shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the Board, or the Company,
or as may be necessary or advisable in the administration of this Agreement, including without
limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make
all determinations deemed necessary or advisable for the administration of this Agreement
(including a determination to redeem or not redeem the Rights or to amend the Agreement). All such
actions, calculations, interpretations and determinations (including, for purposes of clause (y)
below, all omissions with respect to the foregoing) that are done or made by the Board in good
faith, shall (x) be final, conclusive and binding on the Rights Agent and the holders of the
Rights, and (y) not subject the Board to any liability to the holders of the Rights.

SECTION 28. Successors. All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.

SECTION 29. Benefits of this Agreement. Nothing in this Agreement shall be construed to
give to any Person other than the Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the Right Certificates (and,
prior to the Distribution Date, the Common Shares).

SECTION 30. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this

32.

Agreement shall remain in full force and effect and shall in no way be affected, impaired or
invalidated.

SECTION 31. Governing Law. This Agreement and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes
shall be governed by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.

SECTION 32. Counterparts. This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.

SECTION 33. Descriptive Headings. Descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

33.

The parties whereto have caused this Agreement to be duly executed as of the day and year
first above written.

NOT EXERCISABLE AFTER OCTOBER 8, 2011, OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT AND TO AMENDMENT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.

RIGHT CERTIFICATE
CYPRESS BIOSCIENCE, INC.

This certifies that ___________________ or his, her or its registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement, dated as of September 27,
2010 (the Rights Agreement), between Cypress Bioscience, Inc., a Delaware corporation (the
Company), and American Stock Transfer & Trust Company, LLC (the Rights Agent), to purchase from
the Company at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 p.m., New York time,on October 8, 2011 at the office of the
Rights Agent designated for such purpose, or at the office of its successor as Rights Agent, one
one-hundredth of a fully paid non-assessable share of Series A Junior Participating Preferred
Stock, par value $0.001 per share (the Preferred Shares), of the Company, at a purchase price of
$15 per one one-hundredth of a Preferred Share (the Purchase Price), upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly executed. The
number of Rights evidenced by this Right Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of October 8, 2010, based on the
Preferred Shares as constituted at such date.

From and after the time any Person becomes an Acquiring Person (as such terms are defined in
the Rights Agreement), if the Rights evidenced by this Right Certificate are beneficially owned by
(i) such Acquiring Person or an Affiliate or Associate of such Acquiring Person (as such terms are
defined in the Rights Agreement), (ii) a transferee of such Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of such Acquiring
Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such, such Rights shall become null and void without any further
action and no holder hereof shall have any right with respect to such Rights from and after the
time any Person becomes an Acquiring Person.

A-1

As provided in the Rights Agreement, the Purchase Price and the number of one one-hundredths
of a Preferred Share which may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of certain events.

This Right Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, as amended from time to time, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive offices of the Company and
the above-mentioned offices of the Rights Agent.

This Right Certificate, with or without other Right Certificates, upon surrender at the office
of the Rights Agent designated for such purpose, may be exchanged for another Right Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not exercised.

No fractional Preferred Shares will be issued upon the exercise of any Right or Rights
evidenced hereby (other than fractions which are integral multiples of one one-hundredth of a
Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts)
but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.

No holder of this Right Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of the Preferred Shares or of any other securities of the Company
which may at any time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by this Right Certificate shall have been exercised as provided
in the Rights Agreement.

This Right Certificate shall not be valid or obligatory for any purpose until it shall have
been countersigned by the Rights Agent.

A-2

Witness the facsimile signature of the proper officers of the Company effective as of
________ , 20__.

Attest:

Cypress Bioscience, Inc.

By:

Name:

Name:

Title:

Title:

Countersigned:

American Stock Transfer & Trust Company, LLC
as Rights Agent

By:

Authorized Signature

A-3

Form of Reverse Side of Right Certificate

FORM OF ASSIGNMENT

(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)

For Value Received ____________________________ hereby sells, assigns and transfers
unto

(Please print name and address of transferee)

_____________________________ this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint ________________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company, with full power of
substitution.

Dated: ____________________

________________________________________

Signature

A-4

Signature Guaranteed:

Signatures must be guaranteed by an eligible guarantor institution as defined in Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended.

The undersigned hereby certifies that (1) the Rights evidenced by this Right Certificate are
not being sold, assigned or transferred by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the Rights Agreement);
and (2) after due inquiry and to the best of the knowledge of the undersigned, the undersigned did
not acquire the Rights evidenced by this Right Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof.

________________________________________

Signature

A-5

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)

To American Stock Transfer & Trust Company, LLC:

The undersigned hereby irrevocably elects to exercise ___________________________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable upon the exercise
of such Rights and requests that certificates for such Preferred Shares be issued in the name of:

Please insert social security
or other identifying number: ______________

(Please print name and address)

o If the foregoing box is checked, the undersigned is electing to exercise the foregoing number of
Rights not by paying the cash purchase price therefor, but on a cashless basis in accordance with
Section 11(a)(ii)(B) of the Rights Agreement, by surrendering each of such Rights for a share of
common stock of the Company.

If such number of Rights shall not be all the Rights evidenced by this Right Certificate, a new
Right Certificate for the balance remaining of such Rights shall be registered in the name of and
delivered to:

Please insert social security
or other identifying number: ______________

(Please print name and address)

Dated: _________________

________________________________________

Signature

A-6

Signature Guaranteed:

Signatures must be guaranteed by an eligible guarantor institution as defined in Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended.

The undersigned hereby certifies that (1) the Rights evidenced by this Right Certificate are
not beneficially owned by nor are they being exercised on behalf of an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the Rights Agreement); and (2) after
due inquiry and to the best of the knowledge of the undersigned, the undersigned did not acquire
the Rights evidenced by this Right Certificate from any Person who is or was an Acquiring Person or
an Affiliate or Associate thereof.

_____________________________________

Signature

NOTICE

The signature in the Form of Assignment or Form of Election to Purchase, as the case may be,
must conform to the name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.

In the event the certification set forth above in the Form of Assignment or the Form of
Election to Purchase, as the case may be, is not completed, the Company and the Rights Agent will
deem the beneficial owner of the Rights evidenced by this Right Certificate to be an Acquiring
Person or an Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.

A-7

FORM OF

SUMMARY OF RIGHTS TO PURCHASEPREFERRED SHARES

CYPRESS BIOSCIENCE, INC.

(Exhibit B to Rights Agreement)

On September 27, 2010, the Board of Directors (the Board) of Cypress Bioscience,
Inc. (the Company) declared a dividend of one preferred share purchase right (a Right) for
each outstanding share of common stock, par value $0.001 per share (the Common Shares), of the
Company. The dividend is effective as of October 8, 2010 (the Record Date) with respect to the
stockholders of record on that date. The Rights will also attach to new Common Shares issued after
the Record Date. Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.001 per
share (the Preferred Shares), of the Company at a price of $15 per one one-hundredth of a
Preferred Share (the Purchase Price), subject to adjustment. Each Preferred Share is designed to
be the economic equivalent of 100 Common Shares. The description and terms of the Rights are set
forth in a Rights Agreement dated as of September 27, 2010 (the Rights Agreement), between the
Company and American Stock Transfer & Trust Company, LLC (the Rights Agent).

Detachment and Transfer of Rights

Initially, the Rights will be evidenced by the stock certificates representing Common Shares
then outstanding, and no separate Right Certificates will be distributed. Until the earliest to
occur of (i) ten calendar days after a public announcement following adoption of the Rights
Agreement that a person or group of affiliated or associated persons, has become an Acquiring
Person (as such term is defined in the Rights Agreement), (ii) 10 business days (or such later
date as the Board may determine) following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer which would result in the beneficial ownership by an
Acquiring Person of 15% or more of the outstanding Common Shares or (iii) the date on which the
tender offer commenced by Ramius V&O Acquisition LLC (the Purchaser) on September 15, 2010 (the
Ramius Offer) is amended (or such later date as may be determined by the action of the Board
prior to such time as any person becomes an Acquiring Person) to reduce the number of shares of
common stock for which the Ramius Offer is being made, to amend or waive the condition that the
number of shares of common stock that must be validly tendered and not withdrawn must be, together
with the shares of common stock already owned by Purchaser and its affiliates, not less than 90% of
the then outstanding shares of common stock on a fully diluted basis, to reduce the price offered
to be paid in the Ramius Offer or to make any other change in the Ramius Offer which, in the good
faith determination of the

B-1

Board materially adversely affects the holders of shares of common stock (the earliest of such
dates being called the Distribution Date), the Rights will be evidenced, with respect to any of
the Common Share certificates outstanding as of the Record Date, by such Common Share certificate.
In general and subject to certain exceptions, an Acquiring Person is a person, the affiliates or
associates of such person, or a group, which has acquired beneficial ownership of 15% or more of
the outstanding Common Shares. For purposes of the Rights Agreement, beneficial ownership of the
Common Shares generally determined consistent with the provisions of Rule 13d-3 under the
Securities Exchange Act of 1934, which determines beneficial ownership of securities under the
federal securities laws.

The Rights Agreement provides that, until the Distribution Date (or earlier redemption or
expiration of the Rights), the Rights will be transferable with and only with the Common Shares.
Until the Distribution Date (or earlier redemption or expiration of the Rights), new Common Share
certificates issued after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date
(or earlier redemption or expiration of the Rights) the surrender or transfer of any certificates
for Common Shares outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights (Right Certificates)
will be mailed to holders of record of the Common Shares as of the close of business on the
Distribution Date and such separate Right Certificates alone will evidence the Rights.

Exercisability of Rights

The Rights are not exercisable until the Distribution Date. The Rights will expire on October
8, 2011 (the Final Expiration Date), unless amended, unless the Final Expiration Date is extended
or unless the Rights are earlier redeemed by the Company, in each case as described below. Until a
Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the
Company, including, without limitation, the right to vote or to receive dividends.

The Purchase Price payable, and the number of Preferred Shares or other securities or property
issuable or payable, upon exercise of the Rights are subject to anti-dilution adjustments from time
to time. The number of outstanding Rights and the number of one one-hundredths of a Preferred
Share issuable upon exercise of each Right are also subject to adjustment in the event of a stock
split of the Common Shares or a stock dividend on the Common Shares payable in Common Shares, or
subdivisions, consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date. With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments require an adjustment of at least 1% in such Purchase
Price. No fractional Preferred Shares will be issued (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash will be made based on
the market price of the Preferred Shares on the last trading day prior to the date of exercise.

B-2

Terms of Preferred Shares

Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each
Preferred Share will be entitled to a minimum preferential quarterly
dividend payment of $1.00 per
share but will be entitled to an aggregate dividend of 100 times the dividend declared per Common
Share. In the event of liquidation, the holders of the Preferred Shares will be entitled to a
minimum preferential liquidation payment of $100.00 per share but will be entitled to an aggregate
payment of 100 times the payment made per Common Share. Each Preferred Share will have 100 votes,
voting together with the Common Shares. In the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be entitled to receive
100 times the amount received per Common Share. These rights are protected by customary
anti-dilution provisions. Because of the nature of the Preferred Shares dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share purchasable upon
exercise of each Right should approximate the value of one Common Share. The Preferred Shares
would rank junior to any other series of the Companys preferred stock.

Trigger of Flip-In and Flip-Over Rights

In the event that any person or group of affiliated or associated persons becomes an Acquiring
Person, proper provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person or any affiliate or associate thereof (which will
thereafter be void), will thereafter have the right to receive upon exercise thereof at the then
current exercise price of the Right that number of Common Shares having a market value of two times
the exercise price of the Right. This right will commence at the time that a person becomes an
Acquiring Person (or the effective date of a registration statement relating to distribution of the
rights, if later) but in any event no earlier than the Distribution Date. In such event, the
holder of each Right will also be entitled to exercise such Right on a cashless basis by surrender
thereof, with the holder of each Right so surrendered being entitled to one share of common stock
in exchange for such Right upon such surrender.

In the event that the Company is acquired in a merger or other business combination
transaction or 50% or more of its consolidated assets or earning power are sold to an Acquiring
Person, its affiliates or associates or certain other persons in which such persons have an
interest, proper provision will be made so that each such holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then current exercise price of the Right,
that number of shares of common stock or other equity interests of the acquiring company which at
the time of such transaction will have a market value of two times the exercise price of the Right.

Redemption of Rights

At any time prior to the earliest of (i) the time a person becomes an Acquiring Person, or
(ii) the Final Expiration Date, the Board may redeem the Rights in whole, but not in part, at a
price of $0.001 per Right (the Redemption Price). In general, the redemption of the Rights may
be made effective at such time on such basis with such conditions as the Board in its sole
discretion may establish. Immediately upon any redemption of the Rights, the right to exercise

B-3

the Rights will terminate and the only right of the holders of Rights will be to receive the
Redemption Price.

Amendment of Rights

The Rights Agreement and the terms of the Rights generally may be amended by the Board without
the consent of the holders of the Rights.

Additional Information

A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Current Report on Form 8-K dated September 28, 2010. A copy of the Rights
Agreement is available from the Company by writing to: Cypress Bioscience, Inc., 4350 Executive
Drive, Suite 325, San Diego, California 92121. This summary description of the Rights is not
intended to be complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.

B-4

Table Of Contents

Page

SECTION 1.Certain Definitions

1

SECTION 2.Appointment of Rights Agent

6

SECTION 3.Issue of Right Certificates

6

SECTION 4.Form of Right Certificates

8

SECTION 5.Countersignature and Registration

9

SECTION 6.Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates